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Sarkozy faces illegal campaign funding probe

Former French president Nicolas Sarkozy was placed under formal investigation Tuesday over alleged illegal campaign funding, in a new blow to his hopes of getting back into the Elysee Palace. He was questioned during the day over allegations of false accounting that allowed him to greatly exceed spending limits in 2012.

The head of conservative The Republicans party is being formally probed over "illegal election campaign funding by having, as a candidate, exceeded the legal limit for electoral expenses," said a statement by Paris prosecutor Francois Molins.

He was also designated as an "assisted witness" in connection with "accusations of using false documents, fraud and breach of trust," it added.

The case against Sarkozy has hinged on the activity of PR firm Bygmalion, which organised some of Sarkozy's appearances during his failed election campaign four years ago and is accused of using a vast system of false accounting.

Bygmalion allegedly charged 18.5 million euros ($21 million) to Sarkozy's party -- then called the UMP, but since renamed The Republicans -- instead of billing the president's re-election campaign.

As a result, the campaign was able to greatly exceed a spending limit of 22.5 million euros, according to allegations.

Sarkozy's lawyer Thierry Herzog sought to downplay Tuesday's announcement, expressing his "satisfaction" that the ex-president was not placed under formal investigation over the allegations of using false documents, fraud and breach of trust.

Sarkozy, 61, who led France from 2007 before losing to Socialist Francois Hollande in 2012, has always denied any knowledge of the false accounting.

Shortly before the prosecutors' announcement, Sarkozy ally and former interior minister Brice Hortefeux told French television that the ex-president's "honesty and probity (had) not once been called into question."

Bygmalion executives acknowledged the existence of fraud and false billing, but nobody has directly accused Sarkozy of having been aware or taken decisions about it.